Nigeria emerges 4th largest crypto market globally amid bank trading ban

By Cynthia Ezekwe

Given the fast pace of technological advancement,  the cryptocurrency industry is constantly changing and adapting to new technologies, as opposed to fiat currency, which has led to the increase in the usage of cryptocurrencies by many Nigerians making it the fourth largest crypto market in the world.

This is according to a recent research by Coin Journal, a platform that offers digital currency news and information,set to determine the countries that have had the most success in the cryptocurrency industry considering  factors like the number of owners, crypto gains and number of companies and start-ups.

Findings from the research revealed that Nigeria has the fourth most crypto owners in the world, with over 22 million active traders of cryptocurrency in the country, as of 2021, indicating that an estimated 10.34 per cent of the Nigerian population is involved in crypto.

According to the UK based firm, the United States had the largest number of crypto owners, with over 46 million active traders of cryptocurrency.  As of 2021, there was a total of 13.74% of the US population involved in crypto.

Vietnam was ranked second place for the highest number of crypto owners by country, with over 20 million active traders of cryptocurrency in 2021. There was also a higher percentage of the population involved in crypto than in the US, which is 20.27 per cent.

Pakistan occupied the third spot with almost 26.5 million active traders in the country, though it  had a lower percentage of the population involved in crypto than Vietnam and the US, which is 11.50 per cent.

According to the report, millennials in Nigeria are constantly looking for a way out of the country’s economic turmoil and Bitcoin seems a promising step.

Prior to 2017, Bitcoin was initially looked upon with scepticism and associated with ponzi schemes  such as Bitconnect, and  Mavrodi Mudial Moneybox (MMM).

Over time, the  negatives associated with Bitcoin declined,as a result of the factors that promoted the use of bitcoin and cryptocurrencies in Nigeria.

In 2016, the Nigeria Deposit Insurance Commission (NDIC) and the Central Bank of Nigeria(CBN) set up a commission to look into Bitcoin after it became a relevant topic following the shutdown of the MMM ponzi scheme that was active in Nigeria.

However, in  January 2017 the Securities and Exchange Commission(SEC)  issued a warning that no companies or entities involved with cryptocurrencies are recognised or authorised and that there are no protections or insurances against financial losses involving cryptocurrencies.

The CBN issued banks with the instruction that they steer clear any form of transactions that involves the use of virtual currencies, and ensure that  they have anti-money laundering  regulations in place.

Following the strict rules against cryptocurrencies  from the apex bank, In 2017 the CBN banned banks from facilitating transactions that were cryptocurrency-related, however, this ban was not heavily enforced

According to members of the research department at the Central Bank of Nigeria, the restrictions  by the CBN and SEC are designed more as a means to educate the citizens of Nigeria about cryptocurrencies and make sure that they understand that cryptocurrencies are not guaranteed by the state unlike the CBN issued Naira.

A  statement issued by the apex bank on 7 January, 2021, cited its need to protect the public from threats by unregulated activities that are potential areas of illegal operations, which led to the freezing of bank accounts of some Nigerians, who were involved in cryptocurrencies activities.

Despite  the freezing of bank accounts for cryptocurrency-related activities, many Nigerians have said they will continue to use cryptocurrencies, as it serve as a better  hedge of financial value, and provides avenue for  peer-to-peer transactions, as cryptocurrencies are sent from one person’s decentralised wallet to another. This was further boosted by the fact that cryptocurrency is one of the fastest growing industries that promotes the global financial revolution, gaining the interests of investors  all over the world  to get involved in financial technology, with billion-dollar companies having easy access to trading applications.